Will this disqualify us? 30 day lates -FHA 203(k)

[Anonymous]

We have found a Bank owned foreclosed property that we would like to bid on but it will need repairs- roof, pipes and other cosmetic updates. Tax assessment is $69,000 Bank asking price $35,000 Taxes $2500 (houses around it are $60-160k) We already have an FHA loan on our current home that we will be renting out. Appraised value $50,000 (4 years ago) before numerous updates. We owe $31,200 with 10 years left on a 5% ($479 a month and will rent for $675) The thing is we have the following 30 day lates: 11/07 Auto loan - Credit Union has written a letter stating this was not our fault and we have been fighting to get it removed. 8/07 Credit Card - Sheer and utter stupidity. Have written a GW asking for removal and 8/06 Auto 9/06 Auto His credit scores: TU 687, EQ 682, EX 733 My credit scores: TU 666, EQ 664, EX 719 Will the lates knock us out of the running????

[ShanetheMortgageMan]

Assuming your debt to income ratio is solid, and since your credit scores are still pretty good, I don't think those late payments will pose a problem for you getting approved for the new purchase loan.

[Anonymous]

Thank you! I think our ratios are solid. He will earn $35,500 per year (started this job 2 months ago but is in same line of business as old job). I earn $11,000 from home ($7,800 from part-time employer, and $4000 from self-employment) Rental income will be $675 per month (assuming 75% counted $506 income $6075 yr.) Total in coming year - $52575 yr, $4381.25 month Debts: Car - $135 month CC - $248 St Loan(s) - $310 Current Mortgage - $479 Total: $1172 New mortgage est: $521 (allowing for repairs etc and taxes) Monthly debt: $1693 39% the way I figure it. But, I bet FHA looks at past salary also right? We will make $13,757 more a year accounting for rental income and my husband raise in pay at his new job than in prior years...

[Anonymous]

Shane, i thought that fha wouldn't approve w/ any lates in the past 12 mths.? 

[ShanetheMortgageMan]

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cerumens wrote:
Thank you! I think our ratios are solid. He will earn $35,500 per year (started this job 2 months ago but is in same line of business as old job). I earn $11,000 from home ($7,800 from part-time employer, and $4000 from self-employment) Rental income will be $675 per month (assuming 75% counted $506 income $6075 yr.) Total in coming year - $52575 yr, $4381.25 month Debts: Car - $135 month CC - $248 St Loan(s) - $310 Current Mortgage - $479 Total: $1172 New mortgage est: $521 (allowing for repairs etc and taxes) Monthly debt: $1693 39% the way I figure it. But, I bet FHA looks at past salary also right? We will make $13,757 more a year accounting for rental income and my husband raise in pay at his new job than in prior years...

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Appears your debt ratio would be in-line with your estimate, so I'd say you have a real good shot... having some reserves of about $1,200 after you have to bring in down payment/closing costs should do the trick.

[ShanetheMortgageMan]

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kellikis wrote:

Shane, i thought that fha wouldn't approve w/ any lates in the past 12 mths.? 

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For a manual underwrite it won't, but through FHA Total Scorecard anything is possible if there are good compenating factors... in the OP's case their FICO scores are strong enough and they have a good debt to income ratio, which are both compensating factors.

[Anonymous]

shane, with my husband being the only income, his mid score is 616, his dti 15%, good trade lines, income, and rental history, etc., $1200 savings, i'm in question about his late payment history on a personal loan.  the payment history has only been in good standing since may.  he is waiting for a call back from the loan officer to see if they will report the payment history different.  no return call yet.  anyway, as far as compensating factors, what do you think?

[athensguy]

Can you have two FHA loans?

[Anonymous]

Yes, the first loan has to be at a certain LTV ratio. Maybe someone knows the exact ratio can reply? I remember reading 75% but don't take my word for it. Our appraised value at time of refinance was $50,000 (before updates) We owe $31,500 75% of $50,000 would be a mortgage paid down to $37,500.

[ShanetheMortgageMan]

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kellikis wrote:

shane, with my husband being the only income, his mid score is 616, his dti 15%, good trade lines, income, and rental history, etc., $1200 savings, i'm in question about his late payment history on a personal loan.  the payment history has only been in good standing since may.  he is waiting for a call back from the loan officer to see if they will report the payment history different.  no return call yet.  anyway, as far as compensating factors, what do you think?

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I would need a little bit more info such as:  income, monthly debt payments, anticipated sales price, how much you are putting down, is the $1,200 leftover after you put the money down?, does he have any other assets/reserves such as 401k, IRA, etc.?  With late payments as recent as 5/08, and a 616 mid score, you will need some good compensating factors such as a low DTI, good reserves, and/or a larger-than-required down payment.